Mba-III-Organizations Design & Organization Development [10mbahr341]-Notes

7/22/2019 Mba-III-Organizations Design & Organization Development [10mbahr341]-Notes

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Organization Design and Development10MBAHR341

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HUMAN RESOURCE AREA

ORGANIZATION DESIGN & DEVELOPMENTSub Code: 08MBAHR341

ORGANIZATION DESIGN

MODULE 1

Organization: Nature & Scope Definitions overview of various components & structure, Evolution ofOrganization theory, Organizational Theories images of Organization. Organizational Effectiveness Definition importance & approaches to organizational Effectiveness the goal attainment approach the system approach the strategic approach

MODULE 2

Organization Design: Approaches to organizational design Organizational designs for different excellences. -Competitive excellence Institutionalized excellence - Rejuvenatory excellence - Missionary excellence - Versatileexcellence - Creative excellence - External nurturance of organizationalexcellence : The role of super system inpromoting excellence - The role of domain influencing institutions in promoting excellence- The role of thegovernment in promoting organizational excellence

MODULE 3

Structural Dimensions of Organization design: Organization Design - Components of Organization Design -

Dynamic Balance Organization structure, dimension - division of labour, standardization, horizontalDifferentiation, Advantages & disadvantages of Departmentalization; Vertical Differentiation, Span of Control,Centralization, Formalization, Implication of High Formalization, Flexibility.

MODULE 4Contextual Dimensions & Structural Options: Contextual Factors, types of structure, Influence of: Environment,Strategy, Size & Technology and Power & Politics on Structure, Flat structure

ORGANIZATION DEVELOPMENT

MODULE 5

Foundations of Organizational Development: Conceptual frame work of OD, History of OD, First order andsecond order Change, Values, assumptions and believes in OD, characteristics of OD, Participation andEmpowerment, Teams and teamwork, Parallel learning structures, A normative-re-educative strategy of changing,

Applied Behavioural science, Action research.

MODULE 6Managing the OD Process: Components of OD Process, Diagnosis, Action& Program Management; Diagnosis:Diagnosing the System, its subunits\ and Processes, Diagnosis using the Six-box Organizational Model, ThirdWave Consulting: The Action Component: nature of OD intervention, analyzing discrepancies: The ProgramManagement Component: Phases of OD Programs, model for managing change, creating parallel learningstructures.

MODULE 7

OD interventions: Definition, factors to be considered, choosing and sequencing intervention activities,classification of OD interventions, results of OD, typology of interventions based on target groups.Human process interventions (individual, group and inter-group human relations): Individual based: coaching,

counseling, training, Behavioural modeling, delegating, leading, morale boosting, mentoring, motivation, etc.,Group based: conflict management, dialoging, group facilitation, group learning, self-directed work teams, largescale interventions, team building, and virtual teams. Inter-group based: Organization mirroring, third party peacemaking interventions, partneringTechno structural (Structures, technologies, positions etc.,) & Strategic interventions: Techno structural:

Balanced scorecard; business processreengineering; downsizing and outsourcing;

MODULE 8


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The Future and OD: The changing environment, Fundamental strengths of OD, Implications of OD for the client,ethical standards in OD, ODs future, OD Consultants role, issues in consultant-client relationship, Power,Politics& OD, Research on OD

10MBAHR341

ORGANISATIONS: STRUCTURE, PROCESS AND DESIGN

MODULE I

ORGANISATION: Nature & Scope Definitions overview of various components &

structure, Evolution of Organization theory, Organizational Theories images of

Organization. Organizational Effectiveness Definition importance & approaches to

organizational Effectiveness the goal attainment approach the system approach the

strategic approach

ORGANIZATION

The term organization derives from the Greek word organon, meaning a tool or an

instrument.Organization refers to a concrete and tangible entity, which describes the manner in which men,machine, and material resources are or should be organized and inter-related.

ORGANIZATION IS

(a) A social unit or human grouping, deliberately structured for the purpose of attaining specificgoals.(b) Collection of people for the purpose of achieving results or accomplishing tasks throughcombined efforts synergy.(c) Two or more people working together in a co-ordinate manner to achieve group goals

NATURE OF ORGANISATION

(a) Activity analysis:

Analysis regarding which work has to be performed. What emphasis is to be given to each

activity.(b) Decision Analysis:

Analysis of various relationships between the tasks of manager and those of his subordinate,peers and superiors.

CHARACTERISTICS OF AN ORGANISATION

a) Two or more persons: Group or formed to achieve goals.b) Common goals: Group working together towards common goals.c) Co-operative efforts: Ensures smooth functioning and combine the efforts of people

with co-operation.d) Division of work: Divided into small tasks, similar tasks combined based on

specialization and are assigned to individuals to ensure maximum levels of performancee) Communication: Vertical, horizontal established to facilitate delegation of authority

land smooth flow of information.f) Rules and regulations: Implemented to members to maintain consistency.g) Pyramidal shape: narrow span of control at top and wider span of control at lower levels

of management.h) Synergy: Together everyone achieve more.i) Limitation on member behavior.


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ORGANISATIONAL DESIGN:

It is the overall set of structural elements and the relationships among those elements used tomanage the total organization as a whole.

Organization design is concerned with making decisions about the forms of coordination, controland motivation that best fit the enterprise. In making these decisions, it is necessary to considerexternal factors like the market and internal factors like the needs and aspirations of the memberof the enterprise.

ORGANISING:

A Managerial function and process of defining and grouping of activities of the enterprise andestablishing, authority relationship among them.Is the Process by which an organization is created.Is the process which prescribes formal relationships among people.It helps in accomplishing objectives set in the planning process.

It decides how best to group organization activities and resources effectively and efficiently.It is a process of differentiating and integrating activity.

ORGANISATIONAL PROCESS:

It involves identifying, defining, grouping activities, establishing relationships, definingauthority, responsibility delegation, accountability and allocating resources to achieve goalsefficiently and effectively.

DIFFERENTIATION:

Departmentalization or segmentation of Activities:

INTEGRATION:Achieving unity of effort among various departments into individual jobs with specific dutiesand assigning authority to carry out those duties and aggregating individual jobs intodepartments having appropriate bases.

ORGANISATIONAL STRUCTURE:

It is the formal network by which jobs/tasks are divided, grouped and coordinated. It reflectsformal relationships among groups and individuals. It provides guidelines for effective employeeperformance and overall organization success.Structure is a means for attaining the objectives and goals of an institution. Any work onstructure must therefore start with objectives and strategy.

DETERMINANTS OF ORGANIZATION DESIGN:

a) Strategyb) Organizationc) Technologyd) Environmente) Power-Controlf) Age


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g) SizeTHE SIX KEY ELEMENTS THAT MANAGERS NEED TO ADDRESSS WHEN THEY

DESIGN THEIR ORGANISATION STRUCTURE ARE:

a) Work Specialization:The degree to which tasks in an organization are sub-divided into separate jobs. Workspecialization in other words is division of labour.

b) Departmentalization:The basis by which jobs are grouped together is called departmentalization. Popular waysto group activities is by functions performed.

c) Chain of Command:It is an unbroken line of authority that extends from the top of the organization to thelowest and clarifies who reports to whom.

d) Span of Control:The number of sub-ordinates a manager can efficiently and effectively direct.

e) Centralization and Decentralization:The degree to which decision making is concentrated at a single point in an organization.

f) Formalization:The degree to which jobs within an organization are standardized.

Organizational design is engaged when managers develop or change an organization's structure.Organizational Design is a process that involves decisions about the following six key elements:

I. Work SpecializationDescribes the degree to which tasks in an organization are divided into separate jobs. The mainidea of this organizational design is that an entire job is not done by one individual. It is brokendown into steps, and a different person completes each step. Individual employees specialize in

doing part of an activity rather than the entire activity.

II. DepartmentalizationIt is the basis by which jobs are grouped together. For instance every organization has its ownspecific way of classifying and grouping work activities.

There are five common forms of departmentalization:

1. Functional Departmentalization. As shown in the Figure 2-1, it groups jobs byfunctions performed. It can be used in all kinds of organizations; it depends on the goalseach of them wants to achieve.

Figure 2-1Functional Departmentalization example


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Different aspects on this type of departmentalization:

Positive Aspects Negative Aspects

o Efficiencies from puttingtogether similar specialtiesand people with common

skills, knowledge, andorientationso Coordination within

functional areao In-depth specialization

o Poor communicationacross functional areas

o Limited view oforganizational goals

2. Product Departmentalization. It groups jobs by product line. Each manager isresponsible of an area within the organization depending of his/her specialization

Figure 2: Product Departmentalization exampleSource: Bombardier Annual Report



o Allows specialization in o Duplication of functions


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particular products andservices

o Managers can becomeexperts in their industry

o Closer to customers

o Limited view oforganizational goals

3. Geographical Departmentalization. It groups jobs on the basis of territory orgeography.

Figure 2-3: Geographical Departmentalization example



o More effective andefficient handling ofspecific regional issues

that ariseo Serve needs of unique

geographic markets better

o Duplication of functionso Can feel isolated from

other organizational areas

4. Process Departmentalization. It groups on the basis of product or customer flow.Figure 2-4: Process Departmentalization example


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o More efficient flow ofwork activities

o Can only be used withcertain types of products

5. Customer Departmentalization. It groups jobs on the basis of common customersFigure 2-5: Customer Departmentalization example



o Customers' needs andproblems can be met byspecialists

o Duplication of functionso Limited view of

organizational goals

III. Chain of commandIt is defined as a continuous line of authority that extends from upper organizational levels to thelowest levels and clarifies who reports to whom. There are three important concepts attached tothis theory:

Authority: Refers to the rights inherent in a managerial position to tell people what to doand to expect them to do it.

Responsibility: The obligation to perform any assigned duties. Unity of command: The management principle that each person should report to only

one manager.

IV. Span of ControlIt is important to a large degree because it determines the number of levels and managers anorganization has. Also, determines the number of employees a manager can efficiently andeffectively manage.


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V. Centralization and Decentralization

More Centralization More Decentralization

Environment is stable Lower-level managers are

not as capable orexperienced at makingdecisions as upper-levelmanagers.

Lower-level managers donot want to have say indecisions

Decisions are significant. Organization is facing a

crisis or the risk of company

failure. Company is large. Effective implementation of

company strategies dependson managers retaining sayover what happens.

Environment is complex,uncertain.

Lower-level managers arecapable and experienced atmaking decisions.

Lower-level managers wanta voice in decisions.

Decisions are relativelyminor.

Corporate culture is open toallowing managers to have asay in what happens.

Company is geographicallydispersed.

Effective implementation ofcompany strategies dependson managers havinginvolvement and flexibilityto make decisions

VI .FormalizationIt refers to the degree to which jobs within the organization are standardized and theextent to which employee behavior is guided by rules and procedures.

One of the most comprehensive and rational approach for classifying structures was

proposed by Minstzberg(1980-1983).

According to him an organization can be seen as composed of five basic parts. They are:

a) The Strategic Apex: It consists of the top level management in-charge of the overallorganizations. It may consist of a top management team or a single individual.

b) The Operating Core: This consists of employees who perform the basic work related tothe production of goods and service for which the organization is meant.

c) The Middle Line: This consists of the people who connect the strategic apex to theoperating core. These are intermediate managers who transmit, control and help inimplementing the decisions taken by the strategic apex.

d) The Techno structure: This consists of staff functionaries and analysts who designsystems for regulating and standardizing the formal planning and control of the work.

e) The Support Staff: It consists of people who though not directly involved in the workprocess provide indirect support to it. Services like cafeteria, mailing, transport etc


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COMPONENTS OF ORGANISATION DESIGN:

For any practicing manager, designing the organization would involve converting his/herunderstanding of the influences, into tangible organizational structures. An effective structurewould be one which can successfully cope with these demands and constraints. But in order todesign such an organization, the manager must also be aware of the building blocks of an

organization structure. It is necessary therefore, to consider what constitutes the organizationalstructure.It is still possible to identify some of the significant and empirically verified components of theorganization. Even though, the terms used by the researches have varied, there are sufficientoverlaps in their decision to make it possible to integrate the findings under three majorcomponents: Complexity, Formalization and Centralization.

A) COMPLEXITY:

Complexity refers to the degree of differentiation that exists within the organization. (Robins1987) . It focuses on the number of specific jobs, roles, hierarchical levels, work centers, etc, inthe organization. The greater the differentiation in the organization, the more complex would be

the organization.The more complex an organization, the greater is its need for devising more complexmechanisms for control, coordination and communication. When an organization is not verycomplex, the activities of its members can be controlled and coordinated through simplemechanisms, such as informal communications and a few rules and procedures etc. Withincreasing complexity, these simple mechanisms become ineffective. To reduce the uncertaintyin decision making, more expensive and sophisticated mechanisms are required by theorganization. One finds highly complex organizations using a variety of such control andcoordination mechanism, e.g, coordination committees, computerized information system, policymanual etc.Organizations can be complex in three ways:

a) Horizontally (the degree of differences in the nature of jobs in the organization.)b) Vertically (the number of hierarchical levels, or the depth in the structure.)c) Spatially (the degree of the geographical separation among the work units.)

a) HORIZONTAL COMPLEXITY:

Horizontal complexity refers to the degree of differentiation between the organizationsunits/subunits in terms of the nature of work, requirements of skills and knowledge andemployee orientations. Other terms used to describe horizontal complexity in research literatureare differentiation, division of labor, departmentation and functional specialization.Horizontal complexity is often an organizations way of coping with increase in the quantum andcomplexity. They tend to break up their total task into specialized jobs and functions, which are

then manned by personnel with specific expertise and skills.

b) VERTICAL COMPLEXITY:

Vertical complexity refers to the hierarchical levels that exist between the top management andthe lowest level operations in the organization. Increase in vertical complexity is often theorganizations response to increase in the horizontal complexity. When organizational activitiesbecome more and more segmented and specialized, it becomes more difficult for the differentorganizational subunits.


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To understand the part they play in the achievement of the total organization goal. Somebody isrequired to integrate and coordinate and ensure that the work is being performed according to theplan. This need for supervision and coordination results is increased vertical complexity.If the number of hierarchical levels is more, the problems involved in managing the organizationalso increase, there is greater potential for distortion of communication across hierarchies, there

is greater demand for coordinating the managerial decisions taken at different levels, and thesenior levels of management become more distant from the operating core. On the other hand,the flat organizational structures have their own problems, such as more managerial pressures onthe executives, lesser promotional opportunities, etc. And whether an organization should optfor a tall or flat organization would depend on a number of factors.

SPAN OF CONTROL:

It refers to the number of subordinates with report directly to a superior to facilitate verticalcoordination and effective supervision of sub ordinates. The concept of span of control isimportant because it defines the number of levels in the management. In small or flat

organization normally span of control varies from 5 to 25 from top management level to juniormanagement level.

FACTORS INFLUENCING / (DETERMINING SPAN OF CONTROL)

a) Skills and abilities of the managers and employees.b) Characteristics of the work being done/nature of jobs.c) Training and experience of the work being done/nature of jobs.d) Simplicity of employees tasks.e) Complexity of employees tasks.f) Physical proximity of subordinates.g) Degree to which standardized procedures are in place.h)

Sophistication of organizations information system.i) Strength of organizations culture.

j) Preferred style of the manager.k) Rate of change of activities and personnel.l) Clarity of instruction and delegation.

ADVANTAGES OF LARGE SPAN OF CONTROL

1. Significant reduction in administrative costs.2. More effective and efficient organization communication.3. Faster decisions and closer interaction.4. Recruitment such that all personnel become a better trained, informed and educated.

5. Better leadership at all levels.

LINE AND STAFF RELATIONSHIPS:

1. Line relationships are superior-subordinate. Relationships can be traced in a chain ofcommand.2. Staff relationship are advisory in nature and types are

a) Providing advice only on request.b) Recommending where staff office deems appropriate.


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c) Consulting authority Line managers must consult staff in that area.d) Concurring authority Staff having a veto authority over the line manager.e) Promotion between line and staff is a worldwide phenomena and normally get settled

as director.f) Senior management level for decisions to meet organizational goals / requirements.g) Nature of manufacturing processes and size of organization have considerableinfluence in organizational design, especially relating to method of manufacturing,

and communication.Comparison of Tall and Flat Organizational Structures

Tall Organization Structure

(Narrow span of control)Flat Organizational Structure

(Wide span of control)

Needed when:

Closer control and monitoring is required. More autonomy and self control is required.

Mistakes are likely to be costly. Flexibility and innovation is required.

Tasks/roles are clear; require specialization. Ambiguous tasks and roles; specializationdoesnt work.

Routine technology. Non-routine technology.

Inexperienced subordinates. Experienced subordinates.

Placid, stable environment. Unstable, turbulent environment.

Dysfunctional consequences:

Discourages initiative, encouragescentralization.

Lack of proper control; encourages laissez-faire.

Bottlenecks, distortion of verticalcommunication.

Too much demand on the manager forcoordinating.

Slow promotion. Reduced promotional opportunities.

c) SPATIAL COMPLEXITY:

Spatial complexity refers to the degree to which the subunits and personnel of an organizationare geographically separated. An organization may continue to have the same number ofoccupational roles and departments (horizontal complexity) and hierarchical levels (verticalcomplexity), but if it decides to geographically separate its activities, this would introduceadditional requirements for control and coordination of these activities. These requirements ariseout of increased spatial complexity.Many organizations cope with the spatial complexity by having their own corporate service,

wireless system or hotlines. The advent of more efficient telecommunication systems andcomputer technology has also helped the organizations to overcome the problems ofcommunication and coordination. The use of such corporate mechanisms however does notmean that the complexity induced by spatial separation can be eliminated. Rather, in devisingmethods to counter spatial complexity, organizations become more and more complex (e.g.. anew department would have to be setup to look after the courier service.)

B) FORMALISATION


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Formalization refers to the degree to which jobs in an organization are standardized. Greaterformalization would reduce the employees discretion in dealing with their work. By introducingdetailed rules, meticulous work-procedures and clear job descriptions, organizations ensure thatany input is handled in a standard manner so as to produce a uniform output. On the other hand,less formalization would mean that the jobs are less programmed and provide sufficient

discretion to the employees to exercise choices in dealing with their work.

There can be various reasons for an organization to introduce formalization:

a) Formalization of jobs reduces the availability of outputs. By protecting the outputfrom human and incidental variations, the organizations can ensure that its qualitystandards are maintained. As mentioned earlier, in most pharmaceutical companies, thesales presentation made by the medical representatives to the doctors is standardized tothe extent of sales talk and even the gestures and intonations. This ensures that therepresentative is able to effectively communicate maximum information about theproducts to the doctors within the short appointment time.

b) Formalisation is one way of dealing with the complexity of management problems. Ifthe work-process involves a number of specialized, but interdependent jobs, the need tocoordinate these activities also increases. For example, a typical assembly line consists ofa number of specialized operations which are linked with each other serially. Byformalising the activities for each work-centre on the assembly line, the organizationachieves coordination among these activities.

c) Formalisation reduces the need for direct supervision and control. This helps byensuring more time available to the manager for other planning and problem solvingactivities. Once the specific jobs/activities have been standardized the manager need notget directly involved in routine supervisory activities, these can safely delegate down theline. Thus, formalisation leads to more efficient use of the managers time.

d)

By reducing the discretions in doing the job, formalisation also reduces the chance ofmistakes occurring in the execution of the job. Mistakes, after all, means loss ofmoney.

e) Lastly, the greater the discretion in the performance of the job, the greater would bethe need for exercising a judgment by the incumbent. Obviously, a job which entails agreater professional judgment would cost the organization much more in terms of theemployees salaries, perks, benefits, etc. For example, if the job is to recruit and organizea work-force for maintaining a newly commissioned plant, without any formal guidelineswhatsoever, finding the right incumbent might cost the organization a lot of money. Onthe other hand, if there are comprehensive guidelines for recruitment policies andprocedures, this job can be handled by a less experienced person-naturally, at a lesser

salary.Table: Comparison of Organizational and Professional Formalisation

Organizational Formalization Professional Formalization

Usually achieved through rules, procedures,job-descriptions, etc.

Usually achieved through years of professionaltraining.


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Focuses primarily on molding the externalbehavior of the individual.

Focuses primarily on the internal attitudes andorientations of the person.

Based on extrinsic rewards and punishments. Based on internalized values and socialization.

Most often used for routine, unskilled work. Most often used for skilled, non-routine work.

Formalization Techniques

a) Selection and Recruitment:The hiring practice adopted by the organizations is one of the most widely used methodfor controlling discretion and formalizing employee behavior. Organizations select theiremployees on the basis of certain well defined criteria. Besides assuring themselves thatthe person has the technical skills and qualifications. Organizations also assess thecandidate through interviews, group discussions, background investigations, etc. to check

how well the person will fit into the organization. The person is screened for hisattitude, manners, work and social habits, even dress appearance.

b) Role/Job Description:The specification with which the jobs are defined in the organization plays a crucial rolein regulating employee behavior. Organizations make a considerable effort to create jobdescriptions which spell out the dos and donts of any job. These role definitions notonly describe what the job entails, but often also how the activities required for the jobare to be performed.

c) Rules and Procedures:Rules and procedures constitute a detailed program for guiding, molding and regulatingthe employee can or cannot do, whereas the procedures explicitly describe the sequence

of behaviors an employee must go through to get anything accomplished within theorganization. It is important to note that organizations have rules and procedures, notonly for organizational work, but also for issues relating to the employees personal life.

d) Training: One of the most widely accepted methods adopted by the organizations toinstill desired behavior patterns among their employees is through conducting trainingprograms. Many organizations except their freshly inducted employees to go undergo aninduction program before allocating specific work assignments. This involvesfamiliarizing them with the companys philosophy, history, procedures, personnelpolicies, etc. Such an induction program aims at communicating the opportunities as wellas the constraints which an employee can expect to encounter while working for thecompany.

C) CENTRALISATION

The third building block of organizational design is the level of centralization (ordecentralization) in decision making. Centralization/Decentralization is an important dimensionof organizational effectiveness, since it refers directly to how appropriately and swiftly theorganization is able to deal with critical issues and arrive at relevant decisions.Hage defined this dimension as the proportion of jobs whose occupants participate in decisionmaking and the number of areas in which this participation takes place. Similarly,


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Reimann described centralization as reflecting the locus of decision making, with respect tomajor and specific policies, the degree of information sharing between levels, and the degree ofparticipation in long-range planning..

Relative Advantages and Disadvantages of Centralization and Decentralization

Centralization Decentralization

Advantages: Advantages:

Uniformity of policies, standards andactions.

Greater flexibility and appropriateness inresponding to local situations.

Enables closer control and coordination. Allows top management to focus onpolicy issues.

Maximizes economies of scale;eliminates duplication.

Facilitates intra-unit communication.

Reduces risk-factor in decision makingby less informed or less skilledsubordinates.

Increases morale and commitment.Creates healthy competition among units.

Disadvantages: Disadvantages:

Causes alienation and lack of initiative. Causes conflicts of goals and interestsamong units.

Inappropriate response to localrequirements.

Loss of economies of scales; duplicationof efforts.

`

IMPORTANCE OF SOUND ORGANISATION


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i) Division of work: Specialization-individuals to develop better capabilities and betterresource utility.

(ii) Facilitates administration: Avoids overlapping of work Duplication of effort.(iii) Permits optimum use of resources.(iv) Simulates creativity, delegation of authority helps junior levels to do more challenging

works.(v) Facilitates coordination among different working groups, units or departments.

division of work, administration, optimization, simulation, coordination.

ORGANISATIONAL THEORY:

Organizational theory is the study of how organization function and how they are affected by theenvironment in which they operate.Organisation theory is concerned with organizational structure i.e. how to design an organizationstructure that ensures firms effectiveness.Organisation theory is the subject concerned with understanding, explaining and predicting how

best to design the best structure for an organization to fulfill its objectives/goals.Organisation theory is asset of rules developed by organizational experts to help managers re-organize their companies effectively. Knowledge of organizational theory enables managers toanalyze the structure and culture of their organization, diagnose problems and utilize the processof organization design, make changes in the structure and culture that help the organization toachieve its goals.

EVOLUTION OF ORGANIZATION THEORY:

The current state of organization theory is the result of an evolutionary process. Over a period ofmany decades many academics and practitioners from diverse backgrounds and with diverseperspectives have studied and analyzed organizations. Theorists have been introduced, evaluated

and refined over time. New insights tend to reflect the limitations of early theories.It has been suggested that there are two underlying dimensions in the evolution of organizationtheory and that each dimension in turn has opposed perspectives.The first dimension reflects that organizations are open systems.

The second dimension deals with the ends of organisational structure.

Here again are two opposed positions. The rational perspective argues that the structure of anorganization is conceived as a vehicle to effectively achieve specified goals and objectives. Incontrast, the social perspective emphasizes that structure is primarily the result of the conflictingforces by the organizations constituents who seek power and control. Therefore the result is fourtheoretical classifications.

Type- I Theorists: Known as classical school, developed universal principles or models thatwould apply in all situations. Essentially organizations perceived as closed systems. Created toachieve goals efficiently. Ends perspective is rational and central theme being Mechanicalefficiency.

Type II Theorists: Is the recognition of Social Nature of organization forming people andHuman relations school, organization is made up of task & people and the system perspective isclosed. Organizations were no well oiled and were perfectly predictable machines. Management


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could not design formal relationships, rules and the like but there were informal patterns ofcommunication, status, norms, and friendships created to meet social needs of organizationmember.

Type III Theorists: A contingency approach by providing gained momentum in 1960s &

1975. Its system perspective is closed and the end perspective being rational. Theorists saworganizations as the vehicle for achieving the goals. They concentrated on size, technology andenvironmental uncertainty as the major contingency variables that determined what the rightstructure for an organization should be. The theorists argued that properly aligning structure toits contingency variables would facilitate the achievement of the organizational goals.

Type- IV Theorists: Most recent theorists approach focuses on the political nature oforganizations extensively refined by Jeffery Prefer. Its system perspective is open, endsperspective being social and central theme being power and politics. The result is not the rationaleffort by managers to create the most effective structure but rather outcome of the politicalstruggles among coalitions within the organization for control.

EVOLUTION OF ORGANISATION THEORY

Type I Theorists Classical school Organizations Perceived as closed systems created toachieve goals.FREDRIC WINSLOW TAYLORS Principles Of Scientific Management

1911- Published principles of scientific management to improve productivity .He proposed fourprinciples of scientific management to enhance productivity

a) To replace rule-of-thumb methods with scientific methods for determining each elementof a workers job.

b) Scientific selection and training of workers.c) Co-operation of management and labor to accomplish work objectives as per scientific

methods.d) More equal division of responsibility between managers and workers planning &supervising by mangers.

Created fundamentals of todays industrial engineering emphasis on best way of doing a jobselection training and motivate workers.

HENRY FAYOL and Principles of Organization:

Based on years of experience as practicing executive Fayol wrote 14 principles which arefollowed by mangers even now.

a) Division of work: Specialization increases the operations by making employees moreefficient.

b)

Authority: Giving orders. Whenever authority is exercised responsibility arises.c) Discipline: Employees need to obey and respect the rules of the organization.d) Unity of Command: Should receive orders from only one superior.e) Unity of direction: Each groups activities is guided by one objective.f) Subordination of individuals interests to the general interest.g) Remuneration: Fair wage policyh) Centralization:i) Scalar chain: The line of authority from top management to the lowest ranks.


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j) Order People & Material.k) Equity : Fair to subordinates.l) Stability of tenure of personal: High employee turnover is inefficiency.m)Initiative:n) Esprit de corps: Team spirit for unity and harmony within the organization.

MAX WEBER AND BUREAUCRACY

Ideal type organization structure proposed by German sociologist writing in the beginning of 20th

century, proposed a structural model a most efficient means by which organizations can achievetheir hands/success through BUREAOCRACY. It was characterized by division of labor, clearauthority hierarchy, formal selection procedure, detailed rules and regulations and interpersonalrelationships. Webbers description became the design prototype for the structure of most of

todays large organizations.

RALPH DAVIS & RATIONAL PLANNING

Rational planning perspective which proposed that structure was the logical outcome ofOrganizations objectives expressed in this work.None can survive if it does not provide economic value generated by activities of members whocreate organizations and services.Activities link the objectives to its results.Managements job is to group these activities together in such way as to form structure oforganization. The structure of the organization is contingent upon the organisational objectives.

EVOLUTION OF ORGANISATION THEORYType II theorists:

Recognition of social nature of organization. These theorists referred to as forming the human-relations school. Views organizations as made up of both tasks and people.

ELTON MAYO AND HAWTHORNE STUDIES:

On human behavior/productivity by varying illumination levels on worker productivity.(1) Test group with varying intensity of illumination.(2) Control group with constant illumination intensity at Western electric co.First phase: 1924-27:To their surprise they found that as the light level was increased in the experimental group,

output rose for each group. As the light level was dropped in the experimental group,productivity continued to increase in both. In fact, a productivity decrease was observed in theexperimental group only when the light intensity had been reduced to that of moonlight. Theengineers concluded that illumination intensity clearly was not directly related to groupproductivity, but they couldnt observe the behavior they expected. Engineers expected thatindividual output to be directly related to the intensity of the light.Second Phase: 1927-32:


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Women employees with more hours of rest periods, change of snacks serving, shorter workdays, no working on Saturdays all these resulted in the increase in production and absenteeismreduced.III phase 12 weeks experiment:Study on a group of wiremen, soldering man, inspectors assembling terminal banks used in

telephone exchange.Result: esprit de corps. A pride of working in a particular group was established. Knowledgeadded to art of management and leadership and human motivation. Managers to include inorganization design work groups, employee attitudes and managers employee relationship ofmanagement and organization theory.

Conclusion:

It is generally agreed upon by management scholars that the Hawthorne studies had a dramaticimpact on the direction of management and organization theory. It ushered an era of organizationhumanism. Managers would no longer consider the issue of organization design withoutincluding effects on work groups, employee attitudes and manager-employee relationships.

CHESTER BARNARD AND CO-OPERATIVE SYSTEM:

Merging the ideas of Taylor, Fayol and Weber with results from Hawthorne studies led to theconclusion that organizations are co-operative system. They are composed of tasks and peoplethat have to maintain an equilibrium state.The notion that an organization is a cooperative system is generally credited to Chester Barnard.He presented his ideas in The Function of the Executive, in which he drew years of experiencewith American Telephone and Telegraph, including the presidency of New Jersey Bell.In addition to being one of the first to treat organizations as systems, Barnard also offered otherimportant insights. He challenged the classical view that authority flowed from the top down byarguing that authority should be defined in terms of the response of the subordinate, he

introduced the role of the informal organization to organization theory and he proposed that themanagers major roles were to facilitate communication and to simulate subordinates to higherlevels of effort.

DOUGLAS MCGREGOR AND THEORY -X AND THEORY- Y:

There are two distinct human beings. One basically negative-Theory X and the other basicallypositive-Theory Y. After reviewing the way managers dealt with employees, Mc Gregorconcluded that a managers view of the nature of human beings is based on a certain grouping ofassumptions and that he or she tends to mold his or her group behavior toward subordinatesaccording to these assumptions.

Under Theory X, four assumptions are held by managers:a) Employees inherently dislike work and whenever possible will attempt to avoid it.b) Since employees dislike work they must be coerced controlled or threatened with

punishment to achieve desired goals.c) Employees will shirk responsibilities and seek formal direction whenever possible.d) Most workers place security above all other factors associated with work will display

little ambition.


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In contrast to these negative views of human beings, Mc Gregor listed four other

assumptions that he called Theory Y:

a) Employees can view work as being as natural as rest or play.b) Human beings will exercise self-direction and self-control if they are committed to

objectives.

c) The average person can learn to accept and even seek responsibility.d) Creativity-That is, the ability to make good decisions is widely dispersed throughout thepopulation and is not necessarily the sole province of those in managerial functions.

Mc Gregor argued that theory Y assumptions were preferable and that they should guidemanagers in the way they designed their organizations and motivated their employees. Much ofthe enthusiasm, beginning in the 1960s for participative decision making, the creation ofresponsible and challenging jobs for employees, and developing good relations can be traced toMc Gregors advocacy that managers follow theory Y assumptions.

WARREN BENNIS BUREAUCRACY:

He claimed that bureaucracys centralized decision making, impersonal submission to authorityand narrow division of labor was being replaced by decentralized and democratic structuresorganized around flexible groups. Influence based on authority was giving way to influencederived from expertise. In the same way Weber argued the other extreme conditions and pointedout that flexible adhocracies as the ideal organisational form. In few years we had essentiallymoved from one extreme position to another.

EVOLUTION OF ORGANIZATION THEORY

Type- III Theories Contingency Approach

Conflict between thesis and antithesis led to synthesis that provided better guidance to managersthat synthesis was a contingency approach. Theorists saw organizations as the vehicle forachieving the goals. They concentrated on size, technology and environmental uncertainty as themajor contingency variables that determined what the right structure for an organization shouldbe. The theorists argued that properly aligning structure to its contingency variables wouldfacilitate the achievement of the organizational goals.

HERBERT SIMON AND PRINCIPLES OF BAKLASH

Contingency movement gained momentum in 1960s. However, Simon recognized in 1940 thattype I principles would have to give way to contingency approach it took 20 years fororganization theorists to respond to Simons challenge.He argued that organization theory needed beyond superficial oversimplified principles to astudy of conditions under which competing principles were applicable.

KATZ KAHNS ENVIRONMENTAL PERSPECTIVE:

Daniel Katz and Robert Kahns Book The Social Psychology Of Organizations. was a majorimpetus towards promoting type III open- systems perspective to organization theory. Their bookprovided a convincing description of advantages of relations of an organization with itsenvironment and the need for organization theory would be complete without a thoroughassessment of environment as a major contingency factor influencing preferred form of structure.

CASE FOR TECHNOLOGY:


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Research in 1960s Joan Woodward, Charles Perrrow, as with environment no contemporarydiscussion of organization theory would be complete without consideration of technology andthe need for managers to match structure with technology.

THE ASTON GROUP AND ORGANISATION SIZE:

University of Aston in Great Britain advocates that organization size as an important factorinfluencing structure. Large organizations have been shown to have many common structuralcomponents. So, too have small organizations. May be most important evidence suggests thatcertain of these components follow an established pattern as organizations expand in size. Suchevidence has proven valuable to managers in helping them make organization-design decisionsas their organizations grew.

EVOLUTION OF ORGANISATION THEORY:

Type-IV Theorists- focuses on political nature of organizations:

Early formation by James March Herbert Simon extensively refined by Jeffery Pfeffer,and March & Simons Cognitive limits to rationally challenged classical notion of rational or

optimum decision states that most decision makers selected satisfactory alternatives that weregood enough and only on exceptional cases they were concerned with discovery and selection ofoptimal alternatives. Their revised model would recognize the limits of a decision makersrationality and acknowledge the presence of conflicting goals.

PFEFFERS ORGANISATIONS AS POLITICAL ARENAS

Built on March & Simons work, to create a model of organization theory that encompassespower coalition and inherent conflict over goals, states that organizational design decisionsfavor the self interest of those in power.

a) Proposes that control in organizations becomes an efficient production of output.b) Organizations are coalitions composed of varying group and individuals with

different demands.c) An organizations design represents the result of the power starless by these diversecoalitions.

d) It establishes the need to assess the preferences of industry interests of those in theorganization who have influence over the design decisions.

This view is currently very much in vogue.

MARCH AND SIMONS COGNITIVE LIMITS OF RATIONALITY:

They challenged the classical notion of rational or optimum decisions. They argued that mostdecision makers selected satisfactory alternatives. Alternatives that were good enough. Theycalled for a revised model of organization theory-one very different from the rational

cooperative-systems view. This revised model would recognize the limits of a decision makersrationality and acknowledge the presence of conflicting goals.

Summary:

The current state of organization theory fully reflects the contributions of Type 3 , Type 4theorists. Contingency advocates have taken the insights provided by earlier theorists andreframed them in a situational context. The contingency view, in addition to understanding thepoint in identifying those contingency variables that are most important for determining


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structure. The political perspective taken by the type 4 theorists, which was built on knowledgeof behavioral decision making and political science, has significantly improved our ability toexplain organizational phenomena that contingency advocates rational decisions andassumptions are over looked.

IMAGES OF ORGANISATION:To infuse the process of organization with a spirit of imagination that takes us beyondbureaucratic boxes.Imagination is a process through which organizations and people can form new images of self.Diversity of perspectives is not only characteristics of the Laymen, but also of the researchersand organisational theorists. Theories and conceptualizations, explaining the realities oforganization, have also used a variety of Paradigms and Metaphors to capture the essence of howorganizations function.Morgan(1986), Organizations are complex and complicate realities as they are far from a unitedwhole and doesnt convey a common meaning to everyone. The complexity in organizationsallows people to interpret the organization reality in ways convenient to them.

Such diversity of perspectives is not only characteristics of the laymen but also of the researchersand organization theorists.

MORGAN:

It is possible to gain insight into how an organization operates and what it will take to change it.Imagination is a way of thinking, a way of organizing, a way of doing.It is more of a mindset & a capacity than a technique.Morgans imagination definition in 5 ways.

a) Imagination is about our abilities to see and understand situations in new ways.b) Recognize different dimension of organizational life, finding resonant images to make

sensible things and shape appropriate actions.

c)

Imagination is about new images for new ways of organizing: to get beyond existing organization structures. to imagine and explore creative possibilities, to see and read organizational

situations with fresh perspectives.d) Imagination is also about creation of shared understanding, it is about generating essence

of shared vision and values that will help mobilized efforts in a common direct ability toinvent images to meet current challenges to help motivate and mobilize people achievedesired goals.

e) Imagination is about personal empowerment to avoid locking one-self in to appropriatemodes of behavior.

f) Imagination is about developing capacities for continuous self organization. Providingsource of creative energy to enhance and sustain capacities for continuous improvementin organizations so that we can adopt and evolve as we go along. Imagination is the art ofcreative management and metaphors to view organization as machines, brain, culture,political, formation, psychic prisons.

The following are some of the prominent images of organization which recur across the

literature on organisational theory:


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A) Organization as Machines:

Organizations are built around systems and procedures which create conditions of efficiency andreliability of performance.Fixed working hours, production schedule, maintenance schedules, financial control system,sales targets, and code of conduct, clear job descriptions are all natural corollaries of viewing the

organization as machines.The aim of these efforts is to routine the activities and reduces uncertainty of operations.Ex: Pharmaceuticals companies train their medical representatives announcements made by air-hostesses.Even economists Adam Smith in his book, the wealth of Nations noted that division of labor,relying on breaking the total task into small specialized units helped in increasing efficiency byreplacing the discretion of workers with controls exerted by supervisors.Weber also noted that bureaucracy helped in routinising the administrative process in the sameway as machines standardized the manufacturing process. Webers principle of bureaucracystated that division of labour, well defined authority and hierarchy, high formalization,employment direction based on merit were important in achieving goals.

B) Organization as Living Systems:

Burns and Stalker found that regimented and bureaucratic organizational structures wereprimarily useful in dealing with regulated and predictable environments.But in an unstable and complex environment, organization need to develop more loose andflexible structures to cope with adaptive demands. Their findings also highlighted a crucialaspect of organization functioning which was altogether ignored in the machine image oforganization i.e the important interface between the organization and their environment.This characteristic of adapting to the environment also makes organization similar to livingsystems. In fact, not only does the organization interact with the environment but they alsoundergo the phenomenon of growth, maturity and decline.

Katz and Kahn defined organization as an open system. Organization is influenced by theenvironment. This commerce between the organization and its environment is not only confinedto the inputs (men, machine, material) and output (service, products) but changes in theenvironment also determines the corresponding changes in the organization strategy, structureand system.Since organization resembles living beings, they also grew and matured like living beings, that isthey show a predictable sequence of growth. Organization do grow in a predictable sequentialmanner, by no means is this pattern invariant in all cases.Unlike human beings, organization rarely dies and disintegrates. Even when they go into decline,they have a remarkable ability to survive. They renew themselves and make a comeback.

C) Organization as Brains:We have seen that organizations are not merely reactive entities which passively adapt to theenvironmental demands. They are also proactive in their stance. They consciously plan theirstrategies and internal design.This means that the changes in the organization strategies, structure and systems do not occurautomatically in response to the external environment but it depends on the manner in which theorganization receive process and act upon the information emanating from internal and externalenvironment.


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This ability of organization to anticipate and plan for a non-existent (though future) requirementmakes them similar to complex information processing systems which are capable of problem-solving learning and innovating.For any problem faced by an employee, he/she can refer to the books or consult a senior officialto find a solution. But often (particularly in a fast changing business environment), the nature

and number of these exceptions increases much beyond the problem solving capacity of theexisting rules, hierarchies and managerial processes (something similar, incidentally alsohappens to human brain under conditions of stress). In such a situation,

D) Organizations as Political Systems:

The criteria for taking decisions in the meetings are far from rational. They are equallyinfluenced by the specific personalities and relationships of the decision makers. It tells us thatwithin the complex reality of the organization decisions are not just solely determined by thelogic of optimization, but also by the existing power-equations among the organization members.Politics refer to the flow of power and influences within a social system. Organization with theirbuilt-in-hierarchy and authority relationships, are naturally open to political processes.

Organization are political systems because,a) Members enjoy power from various sources( due to position, expertise, group support,seniority etc) which help them in influencing each other.b) By virtue of their role, certain people/ departments are more important for achievingorganisational goals as compared to others.c) Lastly, any viable decisions need to satisfy three kinds of goals:Corporate goal, departmental goal and individual goal. These three in most situations are notcongruent with each other and therefore, call for political skills from the decision maker.Mayes and Allen defined Organisation politics as the management organization influences toobtain ends not sanctioned by the organization or to obtain sanctioned ends through non-sanctioned influence means.

E) Organization as Cultures:

Culture is the totality of socially transmitted behavior patterns, arts, beliefs, institutions and allother products of human work and thought characteristic of a community or population.In other words, the way we do things around here. The significance of organization culture indetermining organization effectiveness has been highlighted by a number of studies.Peters and waterman observed that successful companys were characterized by strong cultures.Organizations that had core values are intensely cherished, clearly stated and widely sharedamong employees.Viewing, organization has some cultural systems has some significant implications:a) It means that managing is more than mere formal process of planning, directing, controlling

and co-coordinating.b) It helps in focusing on the significant roles of basis human processes (motivation, perceptionand leadership.)c) It makes our understanding in regarding to the nature of organizational change and adaptation.d) It provides an insight into crucial interface between organizational and societal culture.

F) Organization as Psychic Prisons:


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The white collar crime quotes the first hand experience of a young man who got into business ofselling used cars: He learned that this business had more tricks for fleeing customers than anyother he had tried previously. Cars with everything wrong were sold as guaranteed when thecustomers returned and demanded his guarantee, he had to sue to get it and very few went to thattrouble and expense. The boss said you could depend on human nature. The thing that struck him

as strange was that all those people were proud of their ability to flee customers. They boasted oftheir crookedness and were admired by their friends and enemies in proportion to their ability toget away with a crooked deal, it was called shrewdness.Another feature was that all these people were unanimous in the denunciation of gangsters,robbers, burglars and petty thieves. They never regarded themselves to be in the same class andwere bitterly indigent if accused of dishonesty because for them it was just good business.Only one has to think about the bridges which collapse due to adulterated cement, spurious killerdrugs etc.What is striking in these everyday happenings is that people involved in committing such ignobledeeds are otherwise respectable, mentally healthy and normal persons.Of course, not all organizations promote and perpetuate pathological behaviors. Pathology in

organization as in human psyche occurs when the system becomes out of tune with the demandsof the objective of reality.The greater the flexibility and responsiveness of an organization, the lesser are the chances of itstrapping itself and its members into pathological patterns.One can say that the whole purpose of understanding organization is to develop workingenvironments which are more humane, healthy and flexible.

ORGANISATIONAL EFFECTIVENESS

It is the degree to which an organization realizes its goals. Organizational effectiveness can bedefined as the degree to which an organization attains its Short (ends) and long term (Means)goals. The selection of (goals) which reflects strategic constituencies, self interest of the

evaluator, and the life stage of the organization.

CRITERIA FOR ORGANISATIONAL EFFECTIVENESS:

a) Overall effectivenessb) Productivityc) Efficiencyd) Profite) Qualityf) Accidentsg) Growthh) Absenteeismi)

Turnoverj) Job satisfactionk) Motivationl) Moralem)Conflict/cohesionn) Flexibility/adaptationo) Planning and goal settingp) Control


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q) Goal consensusr) Internalization of organization goalss) Role and norm congruencet) Managerial interpersonal skillsu) Managerial interpersonal skillsv) Information management & communicationw)Readiness (Response)x) Utilization of environmenty) Evaluations by external entitiesz) Stabilityaa)Value of human resourcesbb)Participation and shared influencecc)Training and development emphasisdd)Achievement emphasis.

Organization Effectiveness requires multiple criteria, that differentiate organizational function. Ithas to be evaluated using different characteristics and that Organisational Effectiveness must

consider both means (process) and ends.

IMPORTANT ASPECTS OF ORGANISATIONAL EFFECTIVENESS ARE:

(i) Ability to adapt to changing environment.(ii) Productivity(iii) Job satisfaction(iv) Profitability(v) Acquisition of scarce and valued resources.

PROCESS OF ACHIEVING ORGANISATIONAL EFFECTIVENESS INVOLVES FIVE

STEPS:

(i) Acquiring resources needed from the environment.(ii) Combining them with an efficient and productive transformation process.(iii) Facilitating and attainment of organization goals.(iv) Making it easier to acquire future resources.(v) Satisfying the strategic constituent in the environmentIf managers can identify were they want their organization to be and relative to other parts oftheir environment and also deals how best to get there, have a good chance of achievingorganizational effectiveness.

APPROACHES TO ORGANISATIONAL EFFECTIVENESS:

a) THE GOAL ATTAINMENT APPROACH

An organization is, by definition, created deliberately to achieve one or more specialized goals. Itshould come as no surprise then to find that goal attainment is probably the most used criterionof effectiveness.The goal-attainment approach states that an organizations effectiveness must be appraised interms of accomplishment of ends rather than means. It is the bottom line that counts. Populargoal attainment criteria include profit maximization, bringing the enemy to surrender, winningthe basketball game, restoring patients to good health, and so forth. Their common denominatoris that they consider the ends to which the organization was created to achieve.


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Assumption: Assumes that organizations are,(i) Deliberate, rational and goal seeking entities andii) Organization must have ultimate goals.(iii)These goals must be identified, defined, well enough to be understood.

(iv)Goals must be few enough to be manageable(v) There must be general consensus/agreement on goals.(vi) Progress towards goals must be measurable.

b) THE SYSTEMS APPROACH

Organizations acquire inputs, engage in the transformation processes, and generate outputs. Ithas been argued that defining OE solely in terms of goal attainment results in only a partialmeasure of effectiveness. Goals focus on outputs. But an organization should be judged on itsability acquire inputs, process these inputs, channel the outputs and maintain stability andbalance. Another way to look at OE, therefore, is through a systems approach.In the systems approach, end goals are not ignored, but they is only one element in a more

complex set of criteria. Systems model emphasize criteria that will increase the long termsurvival of the organization-such as the organizations ability to acquire resources, maintainitself internally as a social organism and interact successfully with its external environment. Sothe systems approach focuses not much on such specific ends but also the means needed for theachievement of those ends.Assumptions: Assumes thatorganizations,

a) Are interrelated sub parts and any one sub parts poor performance will negatively affectwhole system.

b) Require awareness and successful interaction with environment constituencies.c) Also mgmt to have good relationship with, customers, suppliers, Govt. agencies, union

and other powers.

d)

Requires replenishment of men, material etc.

c) THE STRATEGIC-CONSTITUENCIES APPROACH

A more recent perspective on OE is the strategic constituencies approach proposes that aneffective organization is one that satisfies the demands of those constituencies in its environmentfrom whom it requires support for its continued existence. This approach is similar to thesystems view, yet it has a different emphasis. Both consider interdependencies, but the strategic-constituencies view is not concerned with the organizations entire environment. It seeks toappease only those in the environment who can threaten the organizations survival.In this context, most public universities must consider effectiveness in terms of acquiringstudents but need not be concerned with the potential employers of their graduates. Why?Because the survival of these universities is not influenced by whether their graduates get job.

On the other hand, private universities, which charge considerably more than their publiccounterparts, do spend a great deal of time and money in attempting to place their graduates.When parents spend fifty thousand dollars or more to get their son or daughter a bachelorsdegree, they expect it to lead to a job or acceptance in a good graduate school. If this does notoccur, it will be increasingly difficult for the private school to get freshmen applications. Theconverse of this the universitys relation with the legislature in the state within which it operates.Public institutions devote considerable efforts to wooing state legislatures. Failure to have theircooperation is sure to have adverse budget effects on the public university. The private


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universitys effectiveness, in contrast, is little affected by whether or not it has favorablerelationship with the key people in the state capital.

Assumption: Assumes that Organizations are,Adaptable to the environment, customer of society, clients and employees respectively.

Making it operative: Members have to identify the constituencies they consider to be critical tothe organizations survival. This input can be combined and synthesized to arrive at a typical ofcriteria of selected strategic constituencies.

d) THE COMPETING VALUES APPROACH:

The main theme underlying the competing values approach is that criteria you value and use inassessing an organizations effectiveness, it may be, return on investment, market share, newproduct innovation, job security etc depends on who you are and the interests you represent. It isnot surprising that stockholders, unions, suppliers, management or internal specialists, marketingpersonnel, production or accounting may look at the same organization but evaluate itseffectiveness entirely different.

MAKING COMPETING VALUES OPERATIVE:

a) Flexibility Vs control two incompatible dimension of organization structure.(Flexibility favors -Values, Innovation and Adaptation whereas control favors- Stability,order and predictability.)

b) People & organization well being. Which is to be given more importance?c) Means and ends. (Means-Streaming in organizations long-run) (Ends-Final outcome)

These three values can be depicted to form a three dimension diagram

Figure- A Three Dimensional Model Of Organizational Effectiveness.

Flexibility

Means

People Organization

Ends

Control


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These values can further be combined to form eight cells or sets of Organisational

Effectiveness:

Table- Eight OE Criteria Cells

CELLS DESCRIPTION Definition

OFM Flexibility Able to adjust well to shifts in externalconditions and demands.

OFE Acquisition of resources Able to increase external support and expandsize of work force.

OCM Planning Goals are clear and well understood.

OCE Productivity and efficiency Volume output is high; ratio output to input ishigh.

PCM Availability of information Channels of communication facilitateinforming people about things that affect theirwork.

PCE Stability Sense of order, continuity, and smooth

functioning of operations.PFM Cohesive work force Employees trust, respect and work well with

each other.

PFE Skilled work force Employees have the training, skills andcapacity to do their work properly.

We can begin to combine the eight cells into some distinct models/four definition of

organisational effectiveness:

Human Relations Model:

It defines OE in terms of cohesive (as means) and skilled (as ends) work force.

Open- System Model:OE in this model is defined in terms of flexibility (as means) and the ability to acquire resources(as ends).Rational-Goal Model:

The existence of specific plan and goals (as means) and high productivity and efficiency (asends) is used as evidence of effectiveness.Internal Process Model:

It emphasizes people and control and structure adequate dissemination of information (as means)and stability and order (as ends) in the assessment of effectiveness.


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Conclusion:

Approach Definition When useful

1. GoalAttainment

An organization is effective to the extentthat it accomplishes its stated goals.

The approach is preferred when goalsare cleat, time build & measurable

2. Systems It acquires needed resources. A clear connection exists betweeninputs / outputs

3. StrategicConstituencies

All strategic constituencies are at leastmini mall satisfied.

Constituencies have powerfulinfluence on the organization & theorganization and the organization torespond to demands.

4. Competingvalues

The emphasis of the organization in thefour major areas matches constituentpreferences.

Organization is unclear about its ownemphasis, or changes in criteria overthe time are of interest.

Organization effectiveness is considered as central theme in organization theory, its meaning and

measurement to be confirmed.Goal attainment and systems approaches are dominant ones. Focus on accomplishment focus onaccomplishment of ends.

Strategic constituencies is a more recent offering focus on the ability to locate those individuals,groups and institutions upon which organization depends for its continued operation.The final one being competing values which has sought synthesize OE criteria into four models,each of which is based on a given set of values and each of which additionally is preferreddepending on where an organization is in its life cycle.

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MODULE 2

Organization Design: Approaches to organizational design Organizational designs fordifferent excellences. - Competitive excellence Institutionalized excellence - Rejuvenatoryexcellence - Missionary excellence Versatile excellence - Creative excellence - Externalnurturance of organizational excellence : The role of super system in promoting excellence - The

role of domain influencing institutions in promoting excellence- The role of the government inpromoting organizational excellence.

INTRODUCTION:

Some economists and politicians have spoken of three worlds.First world consisting of the wealthy, economically highly developed capitalists countries,mostly Western, the Second world of Soviet Union dominated East European communistcountries mostly located in South America, Africa and Asia. Such is the pace of socio-politicalchange in the second world that in a decade or less it may disintegrate completely, with the bulkmerging into the First World and the remainder into the Third world. Eventually there may bejust the First World, with perhaps a third of the human population and over 80% of its income

and the third world with two thirds population and a fifth or less income. The Third world is ofcourse immensely varied. In 1983 the World Bank listed 73 countries with per capita annualincomes below $1700.Their combined population was about 3000 million. They included nationslike China and India. Despite the diversity in size, cultures and government systems, thesenations of the third world share a few characteristics which must be borne in mind whendesigning their organizations. They are, poverty, inequality, statism, transition fromtraditionalism to modernity.

ORGANISATIONAL DESIGN:

It is the overall set of structural elements and the relationships among those elements used tomanage the total organization as a whole. It involves designing the organization structure by

developing, changing etc.Organization design is concerned with making decisions about the forms of coordination, controland motivation that best fit the enterprise. In making these decisions, it is necessary to considerexternal factors like the market and internal factors like the needs and aspirations of the memberof the enterprise.

FIVE APPROACHES TO ORGANIZATIONAL DESIGN

Managers must make choices about how to group people together to perform their work. Fivecommon approaches functional, divisional, matrix, team, and networkinghelp managersdetermine departmental groupings (grouping of positions into departments). The five structures

are basic organizational structures, which are then adapted to an organization's needs. All fiveapproaches combine varying elements of mechanistic and organic structures. For example, theorganizational design trend today incorporates a minimum of bureaucratic features and displaysmore features of the organic design with a decentralized authority structure, fewer rules andprocedures and so on.


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Functional structure

The functional structure groups positions into work units based on similar activities, skills,expertise, and resources (see Figure 1 for a functional organizational chart). Production,marketing, finance, and human resources are common groupings within a functional structure.

Figure 1The functional structure.As the simplest approach, a functional structure features well-defined channels ofcommunication and authority/responsibility relationships. Not only can this structure improveproductivity by minimizing duplication of personnel and equipment, but it also makes employeescomfortable and simplifies training as well.But the functional structure has many downsides that may make it inappropriate for someorganizations. Here are a few examples:

The functional structure can result in narrowed perspectives because of the separatenessof different department work groups. Managers may have a hard time relating to

marketing, for example, which is often in an entirely different grouping. As a result,anticipating or reacting to changing consumer needs may be difficult. In addition,reduced cooperation and communication may occur.

Decisions and communication are slow to take place because of the many layers ofhierarchy. Authority is more centralized.

The functional structure gives managers experience in only one fieldtheir own.Managers do not have the opportunity to see how all the firm's departments worktogether and understand their interrelationships and interdependence. In the long run, thisspecialization results in executives with narrow backgrounds and little training handlingtop management duties.

Divisional structure

When a company expands to supply goods or services to a variety of customers, offers a varietyof different products or are engaged in business in several different markets, the company couldadopt a divisional organizational structure.

A divisional structure groups its divisions according to the specific demands of products, marketsor customers. Unlike the functional organizational structure, where the different organizationalfunctions of the company conduct activities satisfying all customers, markets and products, the


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Figure 2The divisional structureDisney in the early 1990s.However, divisional structure does have its drawbacks. Because managers are so specialized,they may waste time duplicating each other's activities and resources. In addition, competitionamong divisions may develop due to limited resources.

Matrix structure

The matrix structure combines functional specialization with the focus of divisional structure(see Figure 3 ). This structure uses permanent cross-functional teams to integrate functional

expertise with a divisional focus.


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Figure 3The matrix structure.

Employees in a matrix structure belong to at least two formal groups at the same timeafunctional group and a product, program, or project team. They also report to two bossesonewithin the functional group and the other within the team.

This structure not only increases employee motivation, but it also allows technical and general

management training across functional areas as well. Potential advantages include

Better cooperation and problem solving. Increased flexibility. Better customer service. Better performance accountability. Improved strategic management.

Predictably, the matrix structure also has potential disadvantages. Here are a few of thisstructure's drawbacks:

The two-boss system is susceptible to power struggles, as functional supervisors andteam leaders vie with one another to exercise authority.

Members of the matrix may suffer task confusion when taking orders from more than oneboss.

Teams may develop strong team loyalties that cause a loss of focus on larger organizationgoals.

Adding the team leaders, a crucial component, to a matrix structure can result inincreased costs.


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Team structure

Team structure organizes separate functions into a group based on one overall objective (seeFigure 4 ). These cross-functional teams are composed of members from different departmentswho work together as needed to solve problems and explore opportunities. The intent is to break

down functional barriers among departments and create a more effective relationship for solvingongoing problems.

Figure 4The team structure.The team structure has many potential advantages, including the following:

Intradepartmental barriers break down. Decision-making and response times speed up. Employees are motivated. Levels of managers are eliminated. Administrative costs are lowered.

The disadvantages include:

Conflicting loyalties among team members. Time-management issues. Increased time spent in meetings.

Managers must be aware that how well team members work together often depends on thequality of interpersonal relations, group dynamics, and their team management abilities.

Network structure

The network structure relies on other organizations to perform critical functions on a contractualbasis (see Figure 5 ). In other words, managers can contract out specific work to specialists.


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Figure 5The network structure.

This approach provides flexibility and reduces overhead because the size of staff and operationscan be reduced. On the other hand, the network structure may result in unpredictability of supplyand lack of control because managers are relying on contractual workers to perform importantwork.

EXCELLENCE:

It means surpassing or outstanding achievement. Excellence is important to society because it

sets an example, a standard behavior that is socially useful.Excellence is especially valuable in the third world. These are unsettled, seething societies inwhich the ethic of hard, honesty work for long term success is fighting a titanic battle with theethic of expediency, short cuts, corruption and use of contacts to bypass merit.Human excellence comes in many forms. Being the best amongst competitors is one form-theexcellence associated with the champion. Invention or innovation is another form of excellence.Invention relates to the concept of a bright new idea. All these excellences are obviously not costfree. These are costs of mental and physical effort, sacrifices made by oneself as well as onesdear and near ones in the pursuit of surpassing achievement, opportunities forgone. Humanexcellence is manifested not just through individual efforts. Team effort is often needed-especially in organizations for surpassing achievements. In settings such as sizeable

organizations where specialization is extensive, excellent teamwork is vital for human excellenceto manifest itself.The more an organization promotes individual or team excellence, the more the organization islikely to excel, for after all the work of the organization is the work of the individuals and thegroups that work in it. Organizational design is therefore largely a matter of promotingindividual and group level excellence and synchronizing it to facilitate excellence in achievingorganizational level goals.


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Some examples of Organizational Excellence: Excellence in the public sector, Excellence in theprivate sector, Excellence among social development oriented organizations, Excellence amonginstitutions, Turnaround of sick enterprises.

FORMS OF ORGANIZATIONAL EXCELLENCE:

Just as human excellence takes many forms, so does organizational excellence, for theorganization is after all an entity of human for humans and managed by humans. There is thechampion-type of organizational excellence-the best performance in a competitive field during aparticular period. This may be called as Competitive Excellence. Vastly superior performancecompared to the past, the best earnings per share performance among well-performingenterprises in their respective industries. These were the examples of sick organizations that haddramatically improved their performance. This may be termed as Rejuvenatory

Mba-III-Organizations Design & Organization Development [10mbahr341]-Notes

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